What formula represents the Debt Ratio when bonds are issued?

The correct formula for the Debt Ratio, particularly when bonds are issued, is represented by the sum of total debt and any proceeds from those bonds divided by the sum of total assets and the proceeds from the bonds. The rationale behind using the Debt Ratio is to assess the proportion of a company’s assets that are financed through debt.

When bonds are issued, the proceeds from these bonds contribute to the company's cash or other asset accounts. Therefore, the Debt Ratio incorporates both the existing debt and the financial boost received from the bond issuance. This is significant as it provides a clearer picture of the company’s financial leverage by reflecting both current obligations and resources available due to new financing.

In this case, adding the proceeds helps to evaluate the overall impact on both the asset base and the total liabilities, making option C the correct interpretation of the Debt Ratio under these circumstances.